This Desk Aid is intended to provide general background information for OSHA personnel regarding the potential tax treatment of payments in whistleblower settlements as of the last updated date below. This desk aid is solely for the benefit of the Government. No duties, rights, or benefits, substantive or procedural, are created or implied by this Desk Aid and its contents are not enforceable by any person or entity against the Department of Labor or the United States. This Desk Aid is based on IRS guidance that is non-precedential and subject to change and is not a substitute for parties seeking advice from their own tax adviser.

Recommended practices:

OSHA should inform parties that OSHA cannot provide complainants or respondents with individual tax advice and that the parties are themselves responsible for compliance with Internal Revenue Code, case law, and guidance and may need to seek advice from their own tax adviser.

OSHA can talk with parties generally about potential taxability of settlements, including (1) the possibility of employer withholding applicable taxes if settlement is for wages and (2) the parties' responsibility to report and pay any applicable taxes on settlement amounts.

OSHA can try to ensure that the settlement agreement expressly states the allocation of payment between wages and other amounts if there are multiple claims or damages. This will help determine the taxability of settlement amounts later if it becomes an issue.